While they may be well-intentioned, the federal government’s new rules cracking down on corporate greenwashing have serious side-effects that will likely delay or even scuttle the very projects that Canada is relying on to slash greenhouse gas emissions and meet the country’s ambitious plans for combating climate change.
The omnibus package of economic policies known as Bill C-59, which became law on June 20, contained long-awaited tax credits for carbon capture and storage (CCS), sparking positive investment decisions for several CCS projects over the summer. Whether the long list of CCS initiatives on the drawing board actually break ground is even more uncertain now, however, as C-59 also served to kneecap how industries can communicate their plans for reaching net-zero emissions by 2050.
The bill contained significant amendments to the Competition Act, requiring companies to more fully substantiate statements about their management of environmental and social issues — with a particular focus on claims related to climate change activity. The concern about this lies in the need for companies to use an “internationally recognized methodology” to report on their decarbonization efforts. Yet, the government failed to provide guidance for what methodologies meet this standard.
At the same time, massive penalties (up to three per cent of a firm’s annual gross global revenues) were introduced for companies found to be making misleading claims. Also added to the mix was the ability for private citizens to lodge complaints with the Competition Bureau (starting June 20, 2025) and reversing the burden of proof so that the onus is now on companies to prove their claims.
This effectively opens the door for all manner of nuisance complaints while making defendants guilty of greenwashing until they can prove their information is valid.
More concerning than its effect on websites and sustainability reports is how the anti-greenwashing laws create new roadblocks for developing the CCS and other cleantech that we need to meet our climate commitments. It’s very hard to build billions of dollars worth of infrastructure to capture, transport and sequester carbon dioxide if you can’t share information publicly about it. Since C-59 encompasses the detailed evidence such as environmental impact assessments required to apply for permits and hold public hearings, Canada’s already onerous regulatory process will undoubtedly become more protracted.
The problem is particularly acute for carbon capture and storage, which Canada has been an early leader in bringing to life. Federal climate plans call for a massive expansion of CCS to address emissions from heavy industries including cement, steel, fertilizer, petrochemicals and upstream oil and gas production. Ironically, the new tax credits for CCS require significant public disclosure about the projects for companies to qualify for government incentives. And with the tax credits slated to be cut in half in 2030, the clock is ticking to get shovels in the ground.
Unfortunately, the vague and poorly implemented changes to the Competition Act only add unnecessary risk and more delay to the fundamental goal of cutting emissions and transitioning to a more sustainable future.
Let’s hope the Competition Bureau pays close attention to the feedback it received on the anti-greenwashing provisions over the past two months and provides more clarity about how they will be enforced.
Otherwise, we risk losing out on the race for investment dollars, skilled labour and supply chains that will flow to the U.S. and other jurisdictions where the hurdles are not as high.
Grady Semmens is a communications consultant specializing in energy, sustainability and ESG reporting.